At Risk of Being Left Behind, Prada Finally Sells Online in China

Following the footsteps of Gucci, Bally, and Louis Vuitton, Prada has finally launched an official online store in China.

Prada says the rationale for the move is to hasten the company’s digital transformation with the goal of recovering from declining profits and sales in the past few years.

When asked “Why not E-commerce” in 2014, Prada’s CEO Patrizio Bertelli responded that he has “more important things to do, like opening stores, for example.”

But the store expansions didn’t add substantial value to the group, which includes Prada, Miu Miu, Church’s and Car Shoe. Its profits fell 27 percent in 2016 to their lowest levels in five years. Profits in China, one of the largest markets for the group, fell 16 percent with low foot traffic through the stores. During the same period, sales at Gucci and Louis Vuitton saw a significant turn-around in the region.

Prada blamed costly retail space and slower economic growth. Analysts urged the group not to focus on building new stores but innovating new, exciting designs. Unlike Gucci, which has made some drastic creative changes, Prada tends to do things more incrementally, leaving consumers unimpressed and dissatisfied.

Mr. Bertelli has since admitted that Prada was late to understand the importance of the digital market for luxury sales.

According to Chiara Tosato, General Manager and Digital e-Commerce Director at Prada, the new website will: drive global online sales; create an omni-channel shopping experience that integrates online and offline shopping; and increase Prada’s communications presence online.

These goals are reflected on the site, which includes mobile-first navigation (perfect for people out shopping who want to check product details online), and richer media content that ensures the store doesn’t diminish the brand’s visual identity online.

A wide range of products are available, along with personalized concierge services, such as a “virtual assistant” chat bot and the ability to book in-store services. Items can be purchased online for pickup in-store, and payments can be made using Alipay and WeChat.

A Prada retail store manager told us that every sales associate is now equipped with an iPhone with a WeChat account to communicate with interested customers. They also conduct the deep analysis of customers’ WeChat post and add any notable information to CRM system.

It appears that Prada is not taking digital transformation lightly and holds a rather conservative attitude towards the progress. The Digital e-commerce Director Tosato projected that e-commerce will account for only 5 percent of total sales by the end of 2018.